AstraZeneca outperforms as FTSE falls back

Pharmaceutical group AstraZeneca is on the rise after a positive trial result for heart drug Brilinta, outperforming the overall market which has succumbed to a spate of profit taking.

Astra reported that Brilinta proved superior to rival Plavix - from Sanofi-Aventis and Bristol-Myers Squibb - in a phase 3 trial, boosting the prospects for the drug, which is due to be submitted for regulatory approval in late 2009. The news has pushed Astra 99p higher to £24.96. Panmure Gordon repeated its buy rating on the company, with analyst Savvas Neophytou saying:

"We shall not go overboard with our celebration of a positive phase III trial at last for AstraZeneca despite our research report of September 2008, which laid out our thesis for Brilinta in detail. The headline data announced today was too thin on the ground to get incrementally more excited but the company announced that the full data will be presented at the annual meeting of the European Society of Cardiology in August 2009 when we should be able to analyse just how good this data has been.

"Nonetheless, our forecasts for Brilinta remain above consensus ($50m, $300m, $675m, $1,148m and $1,664m for 2010, 2011, 2012 and 2014Erespectively compared to consensus of $55, $231m, $444m, $638m and $785m) and we stand by those. In fact, if we are satisfied on the safety signals from this trial, we expect a significant upgrade to our forecasts.

"The shares are trading at a 34% discount to the large-cap European pharmaceutical sector. We believe that most of the risks are adequately reflected in the price. We reiterate our buy recommendation and price target of 3100p."

Overall the market has slipped back as investors cash in on some of their recent gains. The FTSE 100 is currently down 31.39 points at 4430.70, having produced another upbeat performance last week. Wall Street is also forecast to open lower, by around 80 points on current estimates.

Leading the fallers in platinum specialist Johnson Matthey, down 81p to £11.93 as UBS cut its recommendation from buy to neutral.

Also down is another platinum business, mining group Lonmin. It has fallen 102p to £15.20 after launching a $457m rights issue at 900p a share. The proceeds will be used, said the company, to strengthen its financial position as a time of "unpredictable platinum group metal prices and foreign exchange rates." The downbeat comments on prices have undermined other miners, with Kazakhmys down 42.5p at 725p, Eurasian Natural Resources Corporation off 32.5p at 646p and Vedanta Resources 48p lower at £12.53.

But builders merchants Travis Perkins has picked up 16.5p to 770p as it confirmed market talk of a £300m cash call at 365p a share. Collins Stewart issued a buy note, pointing to the number of short positions in the company:

"The issue is smaller than the £350m we expected, and the terms at 7-for-10 are better than the 1-for-1 we had expected. In recent weeks Travis has been the most-heavily shorted stock in the FTSE 250, with 20% shorts in the market. A similar picture at rival Wolseley saw its shorts drop to below 5% post its rights announcement. The same pattern at Travis could see the stock rise sharply."

Retailer Debenhams, tipped over the weekend for a rights issue of up to £500m, has slipped 0.5p to 92.5p.

Elsewhere a profit warning from equipment hire group Ashtead has seen its shares slump 11p to 53p, but security business G4S has climbed 6.65p to 206.25p after a positive trading update.

"We are cutting our estimates but our main concern relates to the rating, given earnings momentum is down for a long while to come: this is a late cycle business, with debt over £1bn and our estimate for cycle low profits of nil. Visibility is poor and markets are only just starting to come off sharply. The two large US based plant hire companies, we believe, see no recovery before 2012. Further, these two - RSC and United Rentals - are saying projects are being cut part way through as funding still is drying up. Given lack of visibility and the late cycle nature of operations, Ashtead is quite likely to come out with more downgrades in the coming months."